Leading article: An election that exposes Germany's sharp divisions

Angela Merkel's new coalition may be less radical than many imagine

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On the face of it, the result of Germany's general election delivers a good deal for the outside world to welcome. For one thing, it spells continuity. The "grand coalition" is no more and Angela Merkel's Christian Democrats have opened coalition talks with the economically liberal Free Democrats. But whatever the shape of the administration that emerges from these negotiations, we know that Ms Merkel will remain as Chancellor and that many ministries will stay in the same hands.

This means there are unlikely to be any sudden destabilising shifts in German foreign policy. One of the threatened consequences of a centre-left coalition was a premature withdrawal of German forces from Afghanistan. That is most unlikely to happen now, to the relief of Germany's Nato allies.

On the face of it, the formation of a centre-right coalition also promises economic reform in a country of crucial importance to the European and global economy. Ms Merkel's new partners, the Free Democrats, campaigned on a bold programme of simplifying and cutting taxes, reforming the sclerotic labour market and easing the burden of regulation on business. Such a reform programme would help to set free some of Germany's stifled economic potential. And by stimulating domestic consumption it should also help to shift the economy away from its traditional reliance on exports for growth. This would help reduce one of the destabilising imbalances that have afflicted the global economy over the past decade.

The election result also appears to promise more dynamic government. This is, after all, the coalition partnership that Ms Merkel favoured. A common belief is that, unbound from the shackles of a centrist coalition, the true reforming Ms Merkel will assert herself. But we should be wary of assuming that the Chancellor is about to be set free to follow her free-market instincts.

For one thing, Germany emerges from this election a sharply divided nation. The Social Democrats certainly did appallingly, gaining less than a quarter of the popular vote. But we need to be clear about why this was. It was less because the SPD's policies were rejected than the fact that it was regarded by many voters as tainted by its role in the coalition. Moreover, the radical leftist Linke party and the Greens performed well. The left might be divided in Germany, but it is certainly not in retreat.

Nor was this election a great victory for the CDU, despite the widespread personal popularity of Ms Merkel. In fact, the party posted one of its worst performances since the Second World War. This result does not, in other words, amount to a powerful mandate for radical economic reform.

Another problem with the "Merkel unbound" theory is the assumption that the Chancellor is, at heart, an economic radical. In fact there is a wealth of evidence to suggest otherwise. In recent years Ms Merkel has consistently positioned herself as a consensus-seeking "mother of the nation", echoing concerns of ordinary Germans about the level of public debt and criticising "Anglo-Saxon" capitalism. It will be hard for her to throw all that into reverse by embracing a radical programme of deregulation and tax cuts.

We are clearer now as to what the leadership of Germany will look like in the coming years. But when it comes to what the second term of Ms Merkel's chancellorship will yield, we are, in many ways, as deep in uncertainty as ever.

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